ECB hands €529bn in emergency loans to European banks
Source: The Guardian
Europe's banks took up €529bn (£445bn) in emergency loans from the European Central Bank in Wednesday's second long-term refinancing operation (LTRO), taking the total lent to more than €1 trillion.
The LTRO, which offers three-year loans, was the key crisis measure introduced by the ECB's governor, Mario Draghi, last year to stave off the risk of a full-blown credit crunch in the euro area, after he took over from the more orthodox Jean-Claude Trichet.
A day after banks were given the opportunity to bid for the funds, the ECB announced that 800 financial institutions had borrowed a total of €529.53bn, in line with market forecasts.
...
In the first operation, in December, the ECB lent just under €500bn, and the measure was widely seen as critical to restoring calm to financial markets – and patching up the finances of struggling European banks.
Read more: http://www.guardian.co.uk/business/2012/feb/29/ecb-emergency-loans-european-banks
not mentioned in the article - "minor" detail: the banks can lend at 1% over three years. Nice if you can then buy 4-7 % government bonds, or give out loans at similar rates. However, the banks are hoarding the cash or buying govt bonds. A nice trick to circumvent the ECB rule not to directly buy those bonds. Half the previous similar operation was mediterranian countries buying their soverign debt. Wonder Mario got italian rates down alright. Very little of this is going to the real economy.
The ECB is accepting collateral for the loans with "relaxed" conditions. :shiver:
A nice line of business.
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